Rakuten changes Buy.com’s e-commerce model

Japanese marketplace operator Rakuten Inc. got a foothold in U.S. e-commerce when it bought computer and general merchandise e-retailer Buy.com Inc. two years ago for $250 million. Since then Rakuten has worked to apply its own marketplace business model to the site. The company says today that transformation is complete and that it will retire the Buy.com nameplate. The site will be branded as Rakuten Shopping, with Buy.com operating within the site as a marketplace seller.

Starting Jan. 31, Buy.com will redirect to Rakuten.com, be known as Rakuten Shopping and do business only as a marketplace where merchants can list their wares for sale and pay Rakuten a commission on each product they sell through the site.

“Rakuten’s core business is a B2B2C marketplace model that we established in Japan and are exporting around the world,” says Mark Kirschner, vice-chief marketing officer of Rakuten Inc. “We are really very focused on expanding our scope, our scale and our geography.” Kirschner yesterday confirmed that Rakuten’s U.K. e-commerce and marketplace site Play.com will also cease its direct e-commerce operations to focus only on its marketplace. Play.com is No. 29 in Internet Retailer’s Top 400 Europe. Rakuten bought Play.com in 2011 for approximately $39 million.

Buy.com, as an e-retailer, is No. 36 on Internet Retailer’s Top 500 Guide. After Jan. 31, however, it will act like any other marketplace seller on Rakuten Shopping. Kirschner says the internal transition for Buy.com has already been happening and that “we’re making that explicit to consumers now.” Buy.com’s Neel Grover, who’d been CEO since 2006, departed last summer, as did chief operating officer Greg Giraudi. Grover has since founded shopping start-up Vau.lt, which is funded by Rakuten Inc.

Rakuten says Rakuten Shopping will continue making available new e-commerce services to merchants selling on the site. In December it launched a video production company called BuyTV Services, for example. It produces videos merchants can use to promote their products on the marketplace, other e-commerce sites and marketing avenues such as corporate presentations. Rakuten says it will further launch social media integrations, live chat and direct e-mail capabilities. It will also add services that customize consumers’ browsing experiences on Rakuten Shopping. A timeline for these services was not immediately available.

Rakuten Inc. has been acquiring at a rapid pace companies that provide services to e-commerce companies. Its LinkShare affiliate marketing division acquired online ad firm mediaForge in September, while Rakuten Inc. acquired Spanish video production firm Wuaki.tv in June and French e-commerce logistics vendor Alpha Direct Services in November. Rakuten also led an investment round in social media network Pinterest, and invested in gift and luxury goods e-retailer AhaLife Holdings Inc. and in gift marketplace DailyGrommet.com.

Kirschner says Rakuten will support the rebranding as Rakuten Shopping with a consumer marketing campaign but did not provide details. “We are a very metrics-driven, quantitative culture so we will go about marketing [Rakuten Shopping] in a very strategic way,” he says.

In February at the Internet Retailer Web Design & Usability Conference, Bernard Luthi, Rakuten Buy.com’s chief marketing officer and chief operating officer, will share his insights into how Rakuten Buy.com—soon to be Rakuten Shopping—has been evolving its design to focus on marketplace merchants in an effort to engage better with consumers.